Cloudflare CEO Matthew Prince has defended the company's decision to lay off more than 20 per cent of its workforce earlier this month, saying the move was driven by changes brought by artificial intelligence.
In an opinion piece published in The Wall Street Journal on May 20, Prince said Cloudflare was continuing to grow strongly with record revenue growth, strong free cash flow and a rising customer base. He said the layoffs were part of a larger shift in how companies may operate in the AI era.
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“I did it because business is changing, and to win the future, Cloudflare needs to change with it,” Prince wrote.
“We haven't found another example in US business history of a public company growing at more than 30% that laid off more than 20% of its workforce.”
The CEO argued that AI would not replace all jobs but would mainly affect roles linked to internal business processes and operations. Referring to management thinker Peter Drucker's 1954 book The Practice of Management, Prince divided company roles into three groups: builders, sellers and measurers.
According to him, builders create products while sellers handle customer relationships and sales. Measurers include teams involved in finance, compliance, operations, internal audits and middle management.
Prince said Cloudflare plans to continue hiring engineers and sales staff even as it reduces some operational roles. “If an engineer on my team can now be 10 times as productive, I'm going to hire as many as I can find,” he wrote.
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He also said human sales teams would remain important because customers still prefer dealing with people who “understand their needs, build trust and fix whatever goes wrong.”
Prince argued that AI would mainly affect measurers roles inside companies. He said AI systems can now handle several measuring and monitoring tasks with greater speed and accuracy that allows companies to track business performance in far more detail than before.
He further mentioned that most of the employees affected by Cloudflare's layoffs belonged to these “measurer” roles. According to Prince, the company reduced middle management positions, consolidated operations teams and automated parts of its finance and marketing work using AI tools.
The company also reduced parts of its marketing and finance teams and merged some operations functions into a single group supported by AI tools.
Despite the layoffs, Prince said Cloudflare currently has a record number of open positions. He added that the company received nearly one million applications for 1,111 paid internships this summer.
Describing the interns as “AI-native,” Prince said most of them “will invent ways to drive our business.”
“They're all builders or sellers, and we expect that the majority will get full-time offers,” he wrote.
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